Robeco Euro Government Bonds 2I EUR

Michiel de Bruin is Head of Global Macro and Portfolio Manager. Prior to joining Robeco in 2018, Michiel was Head of Global Rates and Money Markets at BMO Global Asset Management in London. He held various other positions before that, including Head of Euro Government Bonds. Before he joined BMO in 2003, he was, among others, Head of Fixed Income Trading at Deutsche Bank in Amsterdam. Michiel started his career in the industry in 1986. He holds a post graduate diploma investment analyses from the VU University in Amsterdam and is a Certified EFFAS Analyst (CEFA) charterholder. He holds a Bachelor’s in Applied Sciences from University of Applied Sciences in Amsterdam. Stephan van IJzendoorn is Portfolio Manager and member of Robeco’s Global Macro team. Prior to joining Robeco in 2013, Stephan was employed by F&C Investments as a Portfolio Manager Fixed Income and worked in similar functions at Allianz Global Investors and A&O Services prior to that. Stephan started his career in the Investment Industry in 2003. He holds a Bachelor’s in Financial Management, a Master's in Investment Management from VU University Amsterdam and is Certified European Financial Analyst (CEFA) Charterholder.

The fund is established in Luxembourg and is subject to the Luxembourg tax laws and regulations. The fund is not liable to pay any corporation, income, dividend or capital gains tax in Luxembourg. The fund is subject to an annual subscription tax ('tax d'abonnement') in Luxembourg, which amounts to 0.01% of the net asset value of the fund. This tax is included in the net asset value of the fund. The fund can in principle use the Luxembourg treaty network to partially recover any withholding tax on its income.

Investors who are not subject to (exempt from) Dutch corporate-income tax (e.g. pension funds) are not taxed on the achieved result. Investors who are subject to Dutch corporate-income tax can be taxed for the result achieved on their investment in the fund. Dutch bodies that are subject to corporate-income tax are obligated to declare interest and dividend income, as well as capital gains in their tax return. Investors residing outside the Netherlands are subject to their respective national tax regime applying to foreign investment funds. We advise individual investors to consult their financial or tax adviser about the tax consequences of an investment in this fund in their specific circumstances before deciding to invest in the fund.

The fund incorporates sustainability in the investment process via exclusions, negative screening, ESG integration and a minimum average country sustainability ranking score as well as a minimum allocation to ESG-labeled bonds. The fund complies with Robeco's exclusion policy for countries and does not invest in countries where serious violations of human rights or a collapse of the governance structure take place, or if countries are subject to UN, EU or US sanctions. In addition, the fund excludes the 15% worst ranked countries following the World Governance Indicator 'Control of Corruption'. ESG factors of countries are integrated in the bottom-up country analysis. In the portfolio construction the fund ensures a minimum weighted average score of 6.5 following Robeco's proprietary Country Sustainability Ranking. The Country Sustainability Ranking scores countries on a scale from 1 (worst) to 10 (best) based on 40 environmental, social, and governance indicators. Lastly, the fund invests in a minimum of 10% in green, social, sustainable and/or sustainability-linked bonds.The following sections display the ESG-metrics for this fund along with short descriptions. For more information please visit the sustainability-related disclosures.The index used for all sustainability visuals is based on Bloomberg Euro Aggregate: Treasury.

Over the month of October, government bond market returns were mixed. Returns were positive for Eurozone government bonds. Nonetheless, returns were negative in most other regions, especially in the US and Japan. Eurozone Q3 growth disappointed at -0.1% over the quarter and a mere +0.1% on an annual basis. The closely watched Eurozone October flash CPI at 2.9% was below market expectations. This data acknowledged a deflation trend in the Eurozone. The ECB meeting was mostly uneventful. President Lagarde explicitly mentioned that an earlier end date of PEPP reinvestments was not discussed, which some market participants were expecting to happen. This caused periphery government bond spreads to tighten versus German Bunds. The most notable positive returns within the Eurozone were posted by Greek government bonds, helped by S&P upgrading its credit rating of the country to investment grade.

Based on transaction prices, the fund's return was 0.56%. The return of the fund was positive and the fund outperformed its index (gross of fees). The overweight duration position contributed considerably to performance as bonds rallied. In addition, the yield-curve steepener positions in the fund benefited. Also, non-EMU positions added to performance, as the positive sentiment in these markets continued in October. Positions in euro countries and in government-related paper were broadly neutral.

Most developed market central banks are now at – or close to – the end of their rate hiking cycle. The market is priced for policy rates to stay around current, restrictive levels for a significant amount of time, while inflation is expected to drop further over the same timeframe. What is more, and notwithstanding cyclical considerations, the long-term policy rate levels discounted by markets seem too high in our view, which offers an additional reason to be constructive on government bonds. We remain optimistic on Greek government bonds, as a sovereign rating upgrade by Fitch would likely cause Greek government debt to be included in most major government bond indices. We maintain a relatively cautious stance on Italian BTPs. The Italian government raised the fiscal deficit projected for 2023 and 2024 which, together with weakened economic growth momentum, argues in favor of a higher credit spread on Italian government bonds.